What Is AFFO?
AFFO refines FFO further by subtracting recurring capital expenditures and leasing costs needed to maintain the properties — intended to approximate the cash actually available to distribute to shareholders, often shown per share as "AFFO per share."
Why it matters
AFFO is widely considered a better gauge of a REIT's dividend sustainability than FFO, since it accounts for the ongoing capital spending real estate requires.
FFO vs. AFFO
Funds From Operations — net income with real estate depreciation and property-sale gains/losses added back or removed, a REIT-standard profitability measure.
Adjusted Funds From Operations — FFO further reduced by recurring capital expenditures and leasing costs, meant to approximate actual distributable cash flow.
AFFO is generally considered the better gauge of whether a REIT's dividend is sustainable, since it accounts for the ongoing capital spending real estate requires.
Related Terms
More Investing Terms
This definition is provided for general educational purposes and is not financial, legal, tax, or real estate advice. Verify important decisions with appropriately qualified professionals.
Understand a property's costs and risks before you make an offer
Use the free calculator for your own numbers, or analyze a specific home before you commit.
Or analyze a specific property: Essential Property Analysis, $19 · Property Decision Analysis, $49 · Professional Property Analysis, $99. You choose the depth before you pay.